Question
1A: You are interested in investing in a company that expects to grow steadily at an annual rate of 6 percent. The firm paid a
1A: You are interested in investing in a company that expects to grow steadily at an annual rate of 6 percent. The firm paid a dividend of $3.6 yesterday (D0). If your required rate of return is 13 percent, what is the most you would be willing to pay for this stock? Round it to two decimal places, e.g., 23.56.
1B: Too Green, Inc., is a young start-up company and it expects no dividends on the stock over the next 4 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $2.9 per share dividend in 5 years and will increase the dividend by 4 percent per year thereafter. If the required return on this stock is 10 percent, the current share price is $_______. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))
1C: The next dividend payment (D1) by Cold Beer, Inc., will be $ 3.1 per share. The dividends are anticipated to maintain a 4 percent growth rate forever. If the stock currently sells for $ 46 per share, the required return is ______ percent. Express in percentage without the % sign, and round it to two decimal places, e.g., 13.45.
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